Jefferson County v. Acker 527 U.S. 423 (1999)

JEFFERSON COUNTY, ALABAMA v. ACKER, SENIOR JUDGE, UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF

ALABAMA, ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

No. 98-10. Argued March 29, 1999-Decided June 21,1999

Alabama has not authorized its counties to levy an income tax, but it has authorized them to impose a "license or privilege tax" upon persons who are not otherwise required to pay a license fee under state law. Pursuant to this authorization, Jefferson County enacted Ordinance No. 1120 (Ordinance), which imposes such an occupational tax. The Ordinance declares it "unlawful ... to engage in" a covered occupation without paying the tax; includes among those subject to the tax, federal, state, and county officeholders; measures the fee as a percentage of the taxpayer's "gross receipts"; and defines "gross receipts" as, inter alia, "compensation." Respondents, two United States District Judges who maintain their principal offices in Jefferson County, resist payment of the tax on the ground that it violates the intergovernmental tax immunity doctrine. The county instituted collection suits in Alabama small claims court against the judges, who removed the suits to the Federal District Court under the federal officer removal statute, 28 U. S. C. § 1442. The federal court denied the county's motions to remand and granted summary judgment for respondents, holding the county tax unconstitutional under the intergovernmental tax immunity doctrine to the extent that it reached federal judges' compensation. The en banc Eleventh Circuit affirmed. This Court granted certiorari and remanded for further consideration of whether the Tax Injunction Act, § 1341, deprived the District Court of jurisdiction to adjudicate the matter. On remand, the Eleventh Circuit adhered to its prior en banc decision.

Held:

1. The case was properly removed under the federal officer removal statute. That provision permits a federal-court officer to remove to federal district court any state-court civil action commenced against the officer "for any act under color of office." 28 U. S. C. § 1442(a)(3). To qualify for removal, the officer must both raise a colorable federal defense, see Mesa v. California, 489 U. S. 121, 139, and establish that the

suit is "for a[n] act under color of office," 28 U. S. C. § 1442(a)(3) (emphasis added). Here, the judges argued, and the Eleventh Circuit held, that the county tax falls on the performance of federal judicial duties in the county and risks interfering with the Federal Judiciary's operation in violation of the intergovernmental tax immunity doctrine. That argument, although the Court ultimately rejects it, presents a colorable federal defense. To establish that the suit is "for" an act under color of office, the court officer must show a nexus, a "causal connection" between the charged conduct and asserted official authority. Willingham v. Morgan, 395 U. S. 402, 409. The judges' colorable federal defense rests on a statement in the Ordinance declaring it "unlawful" for them to "engage in [their] occupation" without paying the tax. Correspondingly, the judges see the county's enforcement actions as suits "for" their having "engage[d] in [their] occupation." The Court credits the judges' theory of the case for purposes of the jurisdictional inquiry and concludes that they have made an adequate threshold showing that the suit is "for a[n] act under color of office." Pp. 430-433.

2. The Tax Injunction Act does not bar federal-court adjudication of this case. That Act prohibits federal district courts from "enjoin[ing], suspend[ing] or restrain[ing]" the imposition or collection of any state tax where a plain, speedy, and efficient remedy may be had in the State's courts. 28 U. S. C. § 1341. By its terms, the Act bars anticipatory relief. Recognizing that there is little practical difference between an injunction and anticipatory relief in the form of a declaratory judgment, the Court has held that declaratory relief falls within the Act's compass. California v. Grace Brethren Church, 457 U. S. 393, 408. But a suit to collect a tax is surely not brought to restrain state action, and therefore does not fit the Act's description of suits barred from federal district court adjudication. The Act was modeled on state and federal provisions prohibiting anticipatory actions by taxpayers to stop the initiation of collection proceedings. See, e. g., 26 U. S. C. § 7421(a). These provisions were not designed to prevent taxpayers from defending government collection suits. Pp. 433-435.

3. Jefferson County's tax operates as a nondiscriminatory tax on the judges' compensation, to which the Public Salary Tax Act of 1939,4 U. S. C. § 111, consents when it allows States to tax the pay federal employees receive "if the taxation does not discriminate against [that] employee because of the source of the payor compensation." Pp. 435-443.

(a) The Eleventh Circuit's holding that the tax violates the intergovernmental tax immunity doctrine as applied to federal judges extends that doctrine beyond the tight limits this Court has set. Until 1938, the doctrine was expansively applied to prohibit Federal and State

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